diff --git a/flask_sqlalchemy/__init__.py b/flask_sqlalchemy/__init__.py
index f2c04b8a..12a54622 100644
--- a/flask_sqlalchemy/__init__.py
+++ b/flask_sqlalchemy/__init__.py
@@ -166,13 +166,14 @@ class _SessionSignalEvents(object):
     @classmethod
     def register(cls, session):
         if not hasattr(session, '_model_changes'):
-            session._model_changes = {}
+            session._model_changes = []
 
         event.listen(session, 'before_flush', cls.record_ops)
         event.listen(session, 'before_commit', cls.record_ops)
         event.listen(session, 'before_commit', cls.before_commit)
         event.listen(session, 'after_commit', cls.after_commit)
         event.listen(session, 'after_rollback', cls.after_rollback)
+        event.listen(session, 'after_transaction_create', cls.after_transaction_create)
 
     @classmethod
     def unregister(cls, session):
@@ -184,6 +185,7 @@ def unregister(cls, session):
         event.remove(session, 'before_commit', cls.before_commit)
         event.remove(session, 'after_commit', cls.after_commit)
         event.remove(session, 'after_rollback', cls.after_rollback)
+        event.remove(session, 'after_transaction_create', cls.after_transaction_create)
 
     @staticmethod
     def record_ops(session, flush_context=None, instances=None):
@@ -196,28 +198,54 @@ def record_ops(session, flush_context=None, instances=None):
             for target in targets:
                 state = inspect(target)
                 key = state.identity_key if state.has_identity else id(target)
-                d[key] = (target, operation)
+                d[-1][key] = (target, operation)
+
+    @staticmethod
+    def after_transaction_create(session, transaction):
+        if transaction.parent and not transaction.nested:
+            return
+
+        try:
+            d = session._model_changes
+        except AttributeError:
+            return
+
+        d.append({})
 
     @staticmethod
     def before_commit(session):
+        if session.transaction.nested:
+            return
+
         try:
             d = session._model_changes
         except AttributeError:
             return
 
         if d:
-            before_models_committed.send(session.app, changes=list(d.values()))
+            for level in d[1:]:
+                d[0].update(level)
+
+            if d[0]:
+                before_models_committed.send(session.app, changes=list(d[0].values()))
 
     @staticmethod
     def after_commit(session):
+        if session.transaction.nested:
+            return
+
         try:
             d = session._model_changes
         except AttributeError:
             return
 
         if d:
-            models_committed.send(session.app, changes=list(d.values()))
-            d.clear()
+            for level in d[1:]:
+                d[0].update(level)
+
+            if d[0]:
+                models_committed.send(session.app, changes=list(d[0].values()))
+            del d[:]
 
     @staticmethod
     def after_rollback(session):
@@ -226,7 +254,10 @@ def after_rollback(session):
         except AttributeError:
             return
 
-        d.clear()
+        try:
+            del d[-1]
+        except IndexError:
+            pass
 
 
 class _EngineDebuggingSignalEvents(object):
diff --git a/tests/test_signals.py b/tests/test_signals.py
index fa6611ed..0f88ce26 100644
--- a/tests/test_signals.py
+++ b/tests/test_signals.py
@@ -2,6 +2,7 @@
 import pytest
 
 import flask_sqlalchemy as fsa
+import sqlalchemy as sa
 
 
 pytestmark = pytest.mark.skipif(
@@ -16,6 +17,24 @@ def app(app):
     return app
 
 
+@pytest.fixture()
+def db(db):
+    # required for correct handling of nested transactions, see
+    # https://docs.sqlalchemy.org/en/rel_1_0/dialects/sqlite.html#serializable-isolation-savepoints-transactional-ddl
+    @sa.event.listens_for(db.engine, "connect")
+    def do_connect(dbapi_connection, connection_record):
+        # disable pysqlite's emitting of the BEGIN statement entirely.
+        # also stops it from emitting COMMIT before any DDL.
+        dbapi_connection.isolation_level = None
+
+    @sa.event.listens_for(db.engine, "begin")
+    def do_begin(conn):
+        # emit our own BEGIN
+        conn.execute("BEGIN")
+
+    return db
+
+
 def test_before_committed(app, db, Todo):
     class Namespace(object):
         is_received = False
@@ -59,3 +78,51 @@ def committed(sender, changes):
     assert recorded[0][0] == todo
     assert recorded[0][1] == 'delete'
     fsa.models_committed.disconnect(committed)
+
+
+def test_model_signals_nested_transaction(db, Todo):
+    before_commit_recorded = []
+    commit_recorded = []
+
+    def before_committed(sender, changes):
+        before_commit_recorded.extend(changes)
+
+    def committed(sender, changes):
+        commit_recorded.extend(changes)
+
+    fsa.before_models_committed.connect(before_committed)
+    fsa.models_committed.connect(committed)
+    with db.session.begin_nested():
+        todo = Todo('Awesome', 'the text')
+        db.session.add(todo)
+        try:
+            with db.session.begin_nested():
+                todo2 = Todo('Bad', 'to rollback')
+                db.session.add(todo2)
+                raise Exception('raising to roll back')
+        except Exception:
+            pass
+    assert before_commit_recorded == []
+    assert commit_recorded == []
+    db.session.commit()
+    assert before_commit_recorded == [(todo, 'insert')]
+    assert commit_recorded == [(todo, 'insert')]
+    del before_commit_recorded[:]
+    del commit_recorded[:]
+    try:
+        with db.session.begin_nested():
+            todo = Todo('Great', 'the text')
+            db.session.add(todo)
+            with db.session.begin_nested():
+                todo2 = Todo('Bad', 'to rollback')
+                db.session.add(todo2)
+                raise Exception('raising to roll back')
+    except Exception:
+        pass
+    assert before_commit_recorded == []
+    assert commit_recorded == []
+    db.session.commit()
+    assert before_commit_recorded == []
+    assert commit_recorded == []
+    fsa.before_models_committed.disconnect(before_committed)
+    fsa.models_committed.disconnect(committed)